Subscribe to Unilever's open offer for HUL - IDFC

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Last Updated: Thu, May 02, 2013 07:20 hrs

IDFC Institutional Securities says investors should subscribe to Unilever's open offer for its Indian unit Hindustan Unilever Ltd due to a significant premium and as it expects the offer to create a floor price for the stock.

Unilever plans to pay up to $5.4 billion to raise its stake in its Indian subsidiary, making its biggest deal in 13 years, a huge bet on the strength of demand for personal care and food products in Asia's third-largest economy.

Though its operational concerns on the business remain, IDFC says the new Hindustan Unilever is a leaner organisation than in the FY2001 and upgrades the stock to "neutral," saying the open offer and consequent re-rating will provide support to valuations.